Will the EU Commission agenda deliver for people or for the markets?

Last week, the European Commission presented its 2025 Work Programme, outlining the EU’s political and legislative priorities for this year. Following in the footsteps of former European Central Bank (ECB) chief and Italian Prime Minister Mario Draghi, the European Commission emphasises the green transition as a driver of Europe’s economic competitiveness. This is an important recognition that: without a robust, homegrown green sector, the EU will struggle to keep pace with global players like the US and China, let alone meet its climate targets. 

On 18th February, Draghi returned to the European Parliament, urging EU policymakers to “act more and more as if we were a single state” in order to tackle Europe’s challenges. Among these challenges is securing the massive investments needed for the transition to a climate-neutral economy. 

The Commission is also set to unveil a Clean Industrial Deal, a leaked draft of which highlights a central issue: that EU industry requires immediate access to capital. But the real question remains — where will this money come from, and who will control how it is spent?

While the Commission recognises the scale of the transition, its financing strategy raises serious concerns. Instead of prioritising public investment in its work programme, it places financial markets at the heart of the transition, particularly through the Savings and Investment Union, which aims to attract private capital to fund economic transformation. At the same time, the Commission has made simplification, or deregulation, one of its core priorities, pledging to reduce administrative and reporting burdens for businesses. 

This combination of market-driven investment and deregulation risks undermining the very transition that the Commission claims to support. 

A market-driven green transition won’t work

One of the most troubling aspects of the Commission’s plan is its heavy reliance on financial markets to fund the economic transition. At the heart of this approach is the Savings and Investment Union, a project aimed at integrating and expanding European capital markets. The assumption is that by making it easier for private investors to finance projects, the green transition will naturally accelerate. But this logic is flawed. 

Financial markets prioritise short-term profits over long-term sustainability, meaning capital will inevitably flow towards projects that generate quick returns rather than those most essential for a successful transition. Sectors such as energy efficiency, public transport, and climate adaptation, which are crucial for achieving net zero, but may not deliver immediate financial gains, risk being sidelined.

This market-first approach also shifts power away from democratic decision-making and into the hands of speculative investors. If the green transition is left to the financial sector, decisions about what gets funded, and what does not, will be dictated by profitability rather than social and environmental needs. 

A truly fair and effective green transition cannot rely solely on private capital — it requires strong public investment. Yet, the role of public money is largely absent from the Commission’s plan.

The ECB, which has immense influence over financial flows, could play a decisive role in directing credit and investment towards green industries. For years, we have been advocating for the introduction of a dual interest rate system, which would see the ECB offering preferential lending rates to banks that commit to financing green transition projects, such as energy renovation and renewable energy development. 

Additionally, the Commission is set to present its proposal for the post-2027 Multi-annual Financial Framework (MFF) in July 2025, which will shape the EU’s long-term investment strategy. A bolder EU budget and a publicly-led investment strategy would ensure that green finance serves the public interest. Instead, the Commission seems to be banking on private capital markets to fill the investment gap, despite clear evidence that market-led finance alone will not deliver the scale of investment needed for a successful transition. Private finance has to play its part — but it will not magically step in without strong support and regulatory pressure from public institutions.

Is deregulation putting the green transition at risk?

Alongside its emphasis on market-led investment, the Commission is also pushing for "simplification" of regulations, arguing that cutting red tape will help businesses compete more effectively. 

In the first year of this legislative cycle, the EU Commission plans to introduce 51 new initiatives, 11 of which will focus on regulatory simplification. Three major "Omnibus" packages will revise existing legislation to reduce reporting requirements and streamline administrative processes. While reducing unnecessary bureaucracy is beneficial, deregulation in the name of efficiency could easily backfire and destroy the progress the EU has made over decades of addressing its environmental challenges. 

This is particularly worrying when it comes to climate and financial regulations. The Commission has already indicated that simplification will initially target environmental and financial rules, including sustainable finance reporting, corporate sustainability due diligence, and the EU’s green taxonomy — the framework that defines which economic activities align with net-zero goals.

If sustainable finance rules are watered down, it could allow risky financial products and greenwashing to flourish, making it harder for investors and consumers to distinguish between genuinely green investments and those that are simply branded as such. Meanwhile, reducing oversight of how businesses allocate green investments could tilt the balance even further in favour of large corporations, at the expense of smaller, community-based projects.

In conclusion, the EU’s 2025 Work Programme has the potential to set Europe on the right course for a greener, more competitive future — but to achieve this, the Commission must rethink its approach. A market-driven approach to the green transition will not work, especially if it is combined with the deregulation of crucial environmental and financial protections. If the EU is serious about tackling climate change and building a fair economy, it must take control of the financial system to ensure that investment serves the public interest, not just the bottom line of private investors.